VANCOUVER (miningweekly.com) – Canadian cobalt investment vehicle Cobalt 27 has bought a 1.75% net smelter return royalty (NSR) on all future output of nickel and cobalt from Canadian diversified miner RNC Minerals' Dumont project, in the Abitibi region of Quebec, for $70-million.
Dumont is thought to contain the world's largest undeveloped, permitted and construction-ready reserves of nickel and cobalt – two metals increasingly in demand for their respective roles in making lithium-ion batteries.
"We are very pleased to add the Dumont NSR to our portfolio and the timing couldn't be better. At a time when the DRC [Democratic Republic of Congo], which produces over 65% of the world's cobalt, grows ever-more unstable, OEMs [original-equipment manufacturers], battery manufacturers and automobile companies, are increasingly focused on sourcing nickel and cobalt in stable, conflict-free jurisdictions," chairperson Anthony Milewski said in a news release.
In global markets, the price of cobalt has nearly tripled to $81 500/t in two years, while nickel has risen about 50% in the past six months to a recent high of $14 140/t. Streaming deals offer win-win scenarios for both the investor and the miner, since it offers the miner upfront capital in exchange for fixed metal prices on future production, usually at a discount.
In March 2017, RNC joined forces with private equity firm Waterton Global Resource Management to buy, develop and operate nickel assets. As part of the deal, Waterton bought a 50% stake in Dumont.
It has compliant proven and probable reserves of 1.18-billion tonnes of ore, containing 6.9-billion pounds of nickel and 278-million pounds of cobalt.
TSX-V-listed Cobalt 27 advised that the Dumont NSR royalty would be the company's first investment in its new subsidiary Electric Metals Streaming, which will also hold future streaming and royalty investments.
The company's stock rose 4.67% on Thursday, to close at C$13 apiece, bringing year-to-date gains to 5.7%.